Joe White is COO of Moonfruit.com. He wrote the blog (below) for Reuters' The Great Debate UK series.
All this week Seedcamp, a UK-based internet startup accelerator, has been running its headline annual event Seedcamp Week in London.
As an accelerator, Seedcamp has mimicked a successful process established in the U.S. by Y Combinator, Techstars and others of taking early stage internet entrepreneurs and running them through an intense programme of mentoring and business development. Mentors are laid on from different disciplines and work with the entrepreneurs each day. They cover founders, product experts, venture capitalists, marketing specialists and more. The best ideas at the end of the programme get funding to get started. Seedcamp Week brings the best of the best from the Seedcamps throughout the year and around the world for a final London mentor and pitch feast.
Seedcamp has grown its fund to €5m this year and made some other announcements to bolster its success. There’s no doubt that a tie-up with Dave McClures’s 500 Startups will boost Seedcamp’s profile (disclosure: Dave McClure is also a Moonfruit investor).
But there are two questions that have plagued internet tech financing in recent months: Can Europe produce internet companies that rival their U.S. cousins in terms of success and influence? And are we in a tech bubble?
Let’s deal with Europe first. Seedcamp Week ends today – start-ups this time ranged from grabcad.com and farmeron.com, bringing the internet to engineers and farmers, to compilr.com and transferwise.com hoping to disrupt the software compiling and foreign exchange transfer markets respectively.
In my mind, for the UK to really produce world beaters with $1bn plus valuations, we need to have start-ups that play to our strengths. The UK and London in particular have strong industries in finance, design, music, and the marketing and creative industries. Some of these talent pools should help a great deal in the 2.0 world of slick UI and simplified design. NYC has done well to distinguish itself from the Valley based on a similar city profile to London, with companies like tumblr, foursquare and etsy.
Mint.com (started in 2006 in the US and acquired for $170m in 2009) was complimented for being a design-led site that happened to sell personal finance software. Wonga.com, which provides short term loans, is a UK champion in this ilk. It has similarly great, simplified design, is based in financial services, and with £73m revenues in 2010 and strong growth a high value IPO may be on the cards. Also in this vein is betfair.com, sourced from our national love of gambling, and zopa.com, providing peer-to-peer lending, sourced from the UK’s love of fairness and new found suspicion of banks. Successes like moo.com, last.fm and spotify.com show the influence of the design and music industries.
And now to the bubble. There’s been a lot of talk of tech bubbles, Angel bubbles and accelerator bubbles. Marc Andreessen says we’re not in a bubble and public tech multiples are too low, while Steve Blank says we are in a bubble, particularly at the Angel end which is playing out “by the book”.
The first Internet bubble took a long time to build, from the Netscape IPO in 1995 to the Nasdaq peak in March 2000 and subsequent crash. The U.S. was buzzing for a few years before the money, buzz and funding started to flow and build in Europe. New players piled in and more money chased fewer opportunities. Investors went further afield to chase them.
Moonfruit and I lived through that crash. We took VC funding in January 2000, and launched our business. We had no idea how close to the crash we were, and I don’t think we appreciated how long the boom had already been going when we joined the party. We have a post-crash happy ending, but this is not common. More and more of the U.S. VCs closed their European funds after the crash and many have not come back.
So what does that mean for Seedcamp and 500 Startups? Is this tie-up a sign that Europe is heating up? Is too much money chasing too few opportunities in the Valley? Too many accelerators? Are we beginning the last hurrah? I hope not.
As Mike Butcher from Techcrunch said in a recent interview, Seedcamp’s example spawning more accelerators in Europe could be a case of “a rising tide lifting all boats”. But even if the tide goes out those funds will have been injected into the economy and we’ll be left with more experience and knowledge.
For the original article, click here.
Pettersen is the self styled Chief Technology Officer here at Moonfruit. Asked to explain his role to me he describes it as three targets he likes to ‘hit.’ He oversees new product development, keeps the servers running and generally chips in with the strategic direction the company is heading in. In an attempt to find a common ground between us I suggest it’s similar to the three parts of a workout; Warm-up, muscle work and cool-down? But Pettersen quickly corrects me that there’s no time for a cool-down – He’s always pumping iron.
Last comments